?NGMT 302 mip4-Go XO ?MOMT Group Powerpol/Xi ejoin Zoom meel ×(I shared with me

Question

?NGMT 302 mip4-Go XO ?MOMT Group Powerpol/Xi ejoin Zoom meel ×(I shared with me Goog ? | ezto mheducation.com/hm tpx work's bue on June muh betore Mianignt Question 5(of 10) value 10.00 polnts P14-10 Taxes and WACC LO3] Sxx AM Manufacturing has a target debt-equity ratio or 0.57.ts cost of equity is 18 percent, and its cost of debt is 11 percent. If the tax rate is 35 percent, what is the company's WACC? 11.82% ?1109% 36% ? 1476% 1406% References eBook&Resources; Multple Choice Difficulty Basic P14-10 Taxes and WACC [LO3) Lean ning opjective 14 03 How to determine

Explanation / Answer

B.11.09%

The following is the calculation of WACC:

note:

debt / equity = 0.57 / 1.

=> weight of debt = 0.57 / (1+0.57) =>0.3630

weight of equity = 1 / 1.57 =>0.6370

after tax cost of debt = before tax cost *( 1 - tax rate)

=>11% *(1-0.35)

=>7.15%

source weight (see note) cost wiehgt * cost equity 0.3630 18% 6.534% debt 0.6370 7.15% (see note) 4.5546% Weighted cost 11.09% (rounded to two decimals)

Related Questions

Navigate

• Browse (All)
• Browse #
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.